Conference: Rent regulation
Description
In this session, Dr Charlene Mifsud, partner at Chetcuti Cauchi Advocates who works primarily in property law, will unpacking the Malta Rent Regulations on private residential leases. Residential leases entered into after the entry into force of the Private Residential Leases Act & and any leases renewed after the 1st of January 2020, need to comply with this law. Dr Mifsud will delve deeper into the different types of leases, from short-term to long-term leases and go over the formalities and obligations set out by the new law.
Speaker
Dr. Charlene Mifsud – Partner at Chetcuti Cauchi Advocates
Conference Insight
Introduction
Prior to the promulgation of the Malta Rent Regulations Act of 2020, the rental situation
was unregulated. Therefore, there was absolute contractual freedom when it came to the lease contract. This usually resulted in a situation where the lessor had the upper hand in the relationship. This regulation and this law seek to ensure that we have standards of fairness and adequate accommodation for individuals.
The Act
The Private Residential Leases Act applies to private residential leases entered into after 1st January 2020, and to leases entered into prior to 1st January 2020, where such have been renewed after 1st January 2020. Leases that were in existence prior, but which were renewed after the first of January are also subject to the clauses and regulations of this act. Those leases which were entered into after 1st June 1995, but before the coming into force of this act continue to be regulated by the Civil Code, and fall out of the scope of this act. There are also other leases which fall out of the scope of this act. Namely, tenements belonging to the government, tourist lets, properties not used as primary residence, and tenements which were let before 1st June 1995.
The act lists a number of requirements that every lease agreement must contain in order for it to be valid: there has to be clarity in relation to the tenement that is leased; the agreed use of the tenement let has to be clearly stated; the property needs to be used as one’s primary residence; the period for which the tenement shall be let; whether the lease can be extended (and if yes, how); the amount of rent and how rent is to be paid; any amount paid as deposit; and a detailed inventory.
Without these essential elements the contract will not be registered, and it will be null and void.
Even if there is a tacit renewal, the lessor should update the system to indicate that there has been a renewal. The duty to register lies with the lessor. He has to do so within 10 days from when the lease starts. In cases where the lessor does not register the least for whatever reason, the lessee can do the registration himself, and can claim from the lessor the expense incurred in such registration.
Short private residential leases
Under this act, a short private residential lease is one which has a duration of less than six months. It applies to: non-resident workers who are employed for a period of less than six months; non-resident students who are attending a course of less than six months; residents who need an alternative property for an intermediate period of less than six months; non-residents who need to rent a tenement for less than six months, provided that they do not intend to establish their long-term residence in Malta. Necessary supporting documentation must be attached to the registration to prove which sub-type of short lease it belongs to.
During the first month, there cannot be a termination. Following this month, the lessee may give one week’s notice and terminate the lease. At the end of the lease, the lease comes automatically to an end and it cannot be renewed.
Long private residential leases
Long private residential leases have a term of more than one year. Any agreement for a period longer than six months but shorter than a year would be deemed by law as a term of one year. The law also contains a presumption of renewal in the case of these long private residential leases by a further period of one year, unless there is a notice of termination by the lessor or the lessee. This notice has to be given not later than three months prior to the expiration of the lease.
The date of legal termination from the part of the lessee depends on the term of his lease agreement. If the lease agreement is for a period of more than one year, but less than two, after the first six months he can terminate at one month’s notice. For leases between two and three years, after nine months, he could terminate by giving two months’ notice. If the lease agreement is for three years or more, after a year he can give notice of three months.
If the lessee chooses to terminate the lease in line with these terms, the lessor cannot decide to impose any penalty, for the lessee is exercising his rights according to law. If the lessee, however, decides to terminate prior to the specified periods, the lessor can opt to impose a penalty. He can opt to retain up to one month’s rent from the deposit, but he can also seek to sue the lessee for any other dues to him.
Letting of shared residential space
The act provides within it a mechanism of monitoring and enforcement, and grants substantial powers to the chairperson of the Housing Authority. After having obtained a warrant by a magistrate, he has the right to enter a private tenement in order to determine whether the tenement is being occupied for a residential purpose by people other than the owner without any valid title. If so, the chairperson will issue an enforcement notice. The enforcement notice would require the owner of the property to regularise the position.
Offenders may be liable for a fine of up to 10,000 euros, with an abatement for cooperating with the Authority.
The Act also contemplates an adjudicating panel. The adjudicating panel has exclusive jurisdiction in relation to disputes relating to private residential leases, insofar as the claims are not in excess of 5,000 Euros.
Concluding remarks
There are some matters in the act which create ambiguity.
The act revolves around the concept of primary residence. However, there is no exact definition of what this is tantamount to. ‘Residence’ is defined as a ‘tenement let for a primary residential purpose’, it cannot be a guest house and it has to be fit for habitation.
Another issue raised with this act is in relation to the automatic renewal. Even though a lessee and a lessor may have expressly agreed that a lease would be for a fixed period of one year, the law provides for an automatic renewal if one of the parties forgets to notify the other that he intends to terminate. This goes against the principles of law that are customary.
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